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Graphically show a covered call options strategy, including payoff. Explain why an investor may
use this option strategy.
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- a. Explain the covered call options strategy b. Graphically show a covered call options strategy, including payoff. Explain why an investor mayuse this option strategy.c. Using put-call parity, explain the shape of the payoff line (in part (a) of this question). Whatoption position does it look like and why?Briefly describe what an investment timing option is and why such options are valuable.Describe Option-Pricing Theory.
- Explain how the possible profit and loss possibilities arise for an individual who invests in a: A Call Option, be sure to explain what a Call Option is. Be sure to incorporate the cost of the Call Option in your analysis. A Put Option, be sure to explain what a Put Option is. Be sure to incorporate the cost of the Put Option in your analysis.Explain the Monte-Carlo simulation process for a down-and-out call option for a Pick-n-donot-Pay stock. Explain how will you improve the efficiency of this simulation process usingantithetic variablesBriefly explain the pay-off structure of futures and options contract. Also make it more clear with the help of a flowchart.
- Describe how a risk-free portfolio can be created using stocks and options. How cansuch a portfolio be used to help estimate a call option’s value?Types of Investments: As depicted by the image, choose which of the following is your investment option and explain your answer by highlighting its features and advantages:Describe about the Option-pricing models?
- Explain how the possible profit and loss possibilities arise for an individual who invests in a: a. A Call Option i. Be sure to explain what a Call Option is. ii. Be sure to incorporate the cost of the Call Option in your analysis. b. A Put Option i. Be sure to explain what a Put Option is. ii. Be sure to incorporate the cost of the Put Option in your analysis.Discuss the payoff structures for call and put options and the determinants of call and put option prices. Explain how the option pricing theory can be applied in credit risk modelling.Identify the key parameters that influence option price. Discuss the impact of a rise and fall in the value of each parameter on the prices of put and call options.